Understanding Maturity Benefit in Life Insurance

If a policyholder outlives their policy period, they receive maturity benefits from their policy. This article delves deeper into understanding maturity benefits.

What is Maturity?

Maturity of the policy refers to the expiration date of the policy. It refers to that particular date when the policy period ends and the death benefit is no longer available to the policyholder and the nominee. Maturity of the policy happens when the policyholder outlives the policy period.

What is Maturity Benefit ?

Maturity Benefit refers to the lump sum amount that is transferred by the insurance company to the policyholder for outliving the policy term. In other words, such a transfer happens on the expiration date of the policy. It simply means that if your term insurance plan has a 15 year policy period, and you outlive that period, you will get a payout at the end of those 15 years. Generally, the maturity amount meaning refers to the sum of the premiums paid upto that time and the additional benefits which the insurance company chooses to give to the policyholder. One is only eligible for such benefits only if they have paid all the premiums up until the maturity date. However, it is important to check whether your term insurance policy has a maturity benefit or not. Carefully read the terms and conditions of your policy to determine the same. 

What are the Various Types of Maturity Benefit Plans?

Plans with maturity benefits are of several types. The following are the three most common and popular types:

Term Insurance with Return of Premium: If the insured survives the policy term, they get an additional benefit of return of premium provided all premiums till the maturity date had been paid on time. 

Plans for Endowment : Linked endowment plans generally combine investment and insurance elements. In such plans, the guaranteed sum is usually modest. The funds are invested in debt instruments, offering lower risk and more consistent returns. In contrast, traditional non-linked endowment policies provide a lump sum amount as a maturity benefit to the policyholder or as a death benefit to the beneficiary.

Unit Linked Insurance Plans (ULIPs):Unit Linked Insurance Plans (ULIPs) are influenced by market fluctuations, making them more risky compared to non-linked life insurance policies. A portion of the premiums goes into financial investments, while the remainder provides life coverage. The policyholder selects the investment options, thereby assuming the investment risk. If the policyholder outlives the policy term, the maturity benefit is paid, which equals the total fund value.

How to get Maturity ?

The process for getting maturity is easy and effortless:

Step 1: You are first required to get a policy release form. The policy release form is typically sent to you 1 month before the maturity date by your policy insurer.

Step 2: After the form is filled, you need two witnesses to sign it for you.

Step 3: Fill further documentation asked by the insurer. This is critical since if you fail to provide proper documentation, you might not receive your benefit.

Step 4: Wait for your maturity benefit to be credited in your account.

Wrapping it Up!!

Understanding maturity benefits in life insurance is crucial for ensuring you reap the full rewards of your policy. Maturity benefits represent the lump sum payout received when you outlive the policy term, marking the end of the policy's coverage period. Always review the terms and conditions of your insurance plan to fully understand the benefits and requirements, ensuring a smooth and rewarding experience at the end of your policy term.

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